Being a D2C brand in a B2C world

Unleashing the power of internet, content, branding & creating experiences.

Writing on storytelling, business, creativity and everything in between.

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When Airbnb launched Airbnb Experiences, it was not just a revenue stream but a way to connect its users more to what it held as one of its core values :

Embrace the adventure - We are driven by curiosity, optimism, and the belief that every person can grow.

Airbnb is essentially a marketplace providing new & exciting experiences. By curating meaningful experiences, it aims to reverse the default consumer behavior of looking for a place to stay and then finding things to do around that place.

Come to think of it, a majority of brands cater to the customer going either by the tenet of Customer doesn’t know what it wants or Customer is always right. The more successful brands, however, do both. In doing so, they shape customer behaviors and build avenues for new products or services.

And what has changed our behavior more than e-commerce?

Coming to 2020 ( it would have felt such a cool year to be in lest all of weren’t in lock-down), India’s e-commerce market is expected to grow by 1200% by 2026 with a CAGR of 35% in FY2020. With the rise of marketplaces, the rise of D2C brands is at an all time high. In this post, I’d like to get into the details of what D2C brands are doing to grow themselves.

Me too, D2C

D2C stands for direct to consumers. It is a business model where the company handles everything from procuring products, manufacturing, and supplying to end customers.

There can be many variations within the value chain of the process. For example, you might choose to get involved in picking raw materials for your products, or you might choose to get the raw material to your facility without any knowledge of their source through another seller/ manufacturer but brand the product as your own. India is seeing a rising wave of D2C brands, especially in the lock-down period. With limited store visits, brands' convincing power has to be either supported through historical evidence ( like traditional brands P&G, HUL, etc.) or through bridging the information symmetry for the customers and making them love you through your content.

Adding D2C as a channel, we have 4 categories of business models :

1. Pure play D2C - Let me build my community

   The Better Home, India’s first sustainability-focused consumer brand, claims to make the world plastic and pollution-free, one bottle at a time. They aren’t planning on going to stores as they are happy with their current community of users who give them feedback and more ideas

2. D2C + Marketplace - You are online, I am online, let’s connect

   Mamaearth is selling in very few stores, but people mostly buy their products online - given the lucrative discounts

3. D2C + In-store + Marketplace - Wherever you go, I follow you

   Fit & Glow’s WOW Science, Blue Tokai etc. Blue Tokai has its own cafes that help it create its presence in eyes of customers even if not contributing much to sales.

4. D2C + In-store - I haven’t come across any example of an Indian brand which is using these two channels but is not online. Chumbak was for a long time following this model until it expanded and moved to model 3.

How do we decide what to choose, where to go?

How do we decide what to choose, where to go?

Well, my Margin is my Opportunity

When Jeff Bezos said, “Your margin is my opportunity,” directed at his suppliers, he could have meant that the items are priced better than traditional retailers.

If you are running your business, that’s the first thing you’d think of “Margin” . And while everyone wants to build a customized experience, not everyone can make the unit economics profitable. And here comes the complex dynamic of where to play and where to not. That is probably why we don’t see new and emerging brands in our nearby stores like PnG or HUL products. Achieving scale of that kind in distribution is a behemoth task, and that is why internet first brands are tapping the online channels where they can take calculated risks on how much to sell based on data on similar products. Once setting a skin in the game, some of these brands venture into offline markets. The internet first electronics brand, Boat entered the offline market when sellers approached them to keep their stocks in their stores owing to the rising demand on the internet. Pepperfry which started as an online Furniture store has started opening up Pepperfry Furniture Studios for giving the customer an in-store shopping experience. Since furniture shopping still is largely about look and feel, opening an offline store seems a natural step in expansion.

When the choice comes between selling on D2C & marketplaces, D2C provides more visibility and an element of uniqueness to the brand, which marketplace with their millions of listings does not do so well for a new small brand.

Sip in some coffee. It’s been long.

Let’s take examples of two internet popular coffee brands - Sleepy Owl & Blue Tokai. Both the brands source coffee from farms in Karnataka. The difference for any customer thinking of buying one of these comes in four things :

1. The information available to the customer - Blue Tokai chooses to brand its packaging specific to each estate they source the coffee from. In contrast, Sleepy Owl does its packaging based on flavors they create from Arabica coffee.

   

2. Pricing - Comparing both the brands, Rs. 151 for 100 grams whereas Sleepy Owl charges 113 for 100 grams. Actual pricing might defer depending on where you are buying it from but comparing two websites and their products, Blue Tokai seems to be more positioned as a premium product (they don’t list their products with prices likes luxury items, you only see the price once checking out :) )

3. Promotion- Both the brands seem to use Instagram as a prime source of their marketing campaign, more on it in the coming sections.

4. Brand packaging - I like the quirky owl and can relate more with it but the colourful peacock is definitely alluring.

Putting a framework to this thinking and think in terms of consumer journey as follows :

Consumer Journey for an internet first brand

Thinking about internet first products, brands are utilizing social media marketing more than ever. The content was always the king, but right now, it looks like the whole kingdom ( people who look up to the king) is looking for something to follow, something to laugh about. So the king has changed its ways of working; it has started engaging more with its people. It has started telling more close to heart stories and sharing more experiences. What I mean is that we are moving heavily towards content-based marketing brought by influencers and customers.

TVs, move aside, please! Hello, influencers & happy customers!

Dove was unique in never using any models or actors in its advertisements and just real women from different walks of life. When I read about it, I felt a sense of respect for their approach. We all look for someone to follow. And influencers are motivating us to buy things - good or bad.

“What has worked for us is content. 93 percent of cosmetic consumption happens in retail. We learned early on that content will be part of a strategy. We can create a product for Indian skin tones. We have micro-influencers. Women ask questions and then buy the product,” said Vineeta Singh, founder of Sugar Cosmetics.

Influencer marketing looks like a stepping stone in shifting the content creation from just celebrities to common people. The more and more people rise to become influencers, the more and more content we get. I mean, check out the tag #bookstagram on Instagram. Bookstagrammers is a legit community. Amazon even has events with famous bookstagrammers.

Okay, you have my attention but are you for real?

Stage 2 is when your brand has made that first impressions, created a buzz, and now the consumer wants to know more to move to stage 3 -Purchase. Let’s call this consumer Sarah. What does Sarah do?

1. She checks your website to know what you truly care about - be it a story about nostalgia, a detailed note of your process, or simply a cause you are committed to. There are two things that can happen from here :

   a. Conversion

   Sarah loves your product, gets to know everything she wants, and buys your product. Finally, she tells about her purchase to her friends.

   b. Disappointment

   She thinks you are not honest enough or priced too high for a locally sourced coffee or a sustainable sanitizer.

2. If you are a consumer product brand, she searches you on the marketplace for better discounts and, of course faster delivery ( We are spoiled for choice). Two things that can happen from here :

   a. Conversion

   She might buy your product and leave the site.

   b. Buy something else

   She sees another similar product at a lower price and better reviews. So here also, the conversion might not be as straightforward as the seller would have thought. She might buy this product even though it is your ad that brought her to the marketplace in the first place.

   c. Do window shopping and leave

Experience - Do it yourself

For Stage 4, these D2C brands are trying to give you some control.

1. By focusing on their values, they are making you feel as if you are part of a revolution, like The Better Home :

   

   Or Yayy! Naturals which is betting on D2C to establish itself in the personal care space for various reasons. They say that their aim is to remain connected to the customer.

   Millennials don’t stick with brands, they stick with a cause, which in our case is to make the products in a sustainable manner. Our products are free from chemicals like paraben and SLS and we are looking at getting a certification from People for the Ethical Treatment of Animals (PETA),” says Ashutosh, co-founder, Yayy! Naturals

2. By making you feel that they care for you :

   

3. By making you feel that they care about where they are sourcing their raw materials from :

   

4. By making you feel special (of course)

   I wrote a post about how Instagram comics show us the mega trends in Business. For one thing, they are not selling you premade products like a sugar heavy bottled drink. With the promise of fresh and preservative free products, they want you to feel good about your purchase when you get the ease of tasting exotic drinks/ food from the confines of your home.

   From coffee bags to Matcha tea boxes, from in-house plant kits to Meal kits, a new era of customer behaviour change is here. This is where I’d like to reiterate what Airbnb set out to do - growing you with them. And this change, if it were a person, drinks comfort and convenience flavoured coffee.

   How are so many brands thinking about the same things, we might wonder :)

   

Is that all? Enough branding & I get my customers?

Well of course not, if you are talking about repeat customers, the main aim of everyone in business.

Let us take an example of a Kirana shop owner, Ashok.

What I like about my neighborhood kirana shop is that Ashok knows I live in the area and am a frequent visitor. I have the option of pay later or get things exchanged or returned if they are not of the same quality compared to when they were bought earlier. And in this way, I somehow build trust on the shop and sometimes try a new brand of something like almonds or tea also when suggested by him. Replicating the first option has become easy in online shopping with Flipkart/ Amazon allowing you to open monthly accounts to be cleared at the end of every billing cycle. The second option is where brands are experimenting to gain customer trust. To brands that are new, this element of reassurance is crucial. Customers can be driven to your website with enough marketing and buzz creation but they shouldn’t return from your website feeling cheated or ignorant.

One should be wary of Form-Content dichotomy when creating a brand presence.

One of my favourite brands that has literally embraced the meaning of innovation with open arms is Nike. I was mind blown when I first read about Nike Sports Research Lab

Like books, sports give people a sense of having lived other lives, of taking part in other people’s victories. And defeats. When sports are at their best, the spirit of the fan merges with the spirits of the athlete.” - Phil Knight, Shoe Dog: A Memoir by the Creator of NIKE

Subscription model - the Holy Grail for D2C

The closest cousin of ‘shopping from the same neighbourhood kirana store’ is ‘Subscription model’ in online business. Once you have created enough value for the customer, you can use innovative ways to make the customer sign up for a subscription. Now, not all type of products will be subscription friendly. I am still skeptical of trying more coffee brands before I finally subscribe to one particular brand. But what about sanitisers, floor cleaners? I don’t need to try too many brands for subscribing, right? These are the type of products that I subscribe to make me free from adding these items to my monthly buying list.

And how do you make subscription lucrative?

1. Give them a price discount - The most obvious benefit that the customers get when they subscribe.

2. Give them a reason better than savings - The Better Home sends you plastic-free bottles from your second purchase if you subscribe ,and their bottles are recyclable too. They say that 80% of their revenue comes through subscriptions. Azah, a homegrown sanitary pads brand is chemical-free and Made-Safe certified, is calling its customers to join the #RashFreeRevolution.

   This way, you are locking the customer and giving them goodness.

3. Give them choice - For products that depend on customer preferences, like coffee, brands can give a DIY option where they can customize their subscription by giving them assorted items to get “happiness in a box” . While buying online, customers are often apprehensive of buying a large quantity of a new product. It feels like a good time to bring sachets back. Or at least give customers a choice in choosing the right proportions like Yoga Bar’s subscription model.

And finally, tell a good story

Circling back to our focus on good content, read the below text :

The house of Torani is a potpourri of nostalgic memories of fables that Karan Torani’sgrandmother told him while growing up. Born in Delhi, he was always surrounded with an all-embracing culture but it were his days spent in the city of Bhopal around his grandmother that shaped his aesthetic. Remembering long afternoons around her house and watching her do the regular household chores wearing simple Chanderi saris got him obsessed with the classic beauty of Indian handlooms.

The fascinating description is not from a book but from a brand’s website that creates and sells handmade luxury clothing inspired by Indian mythology & nostalgia. Their website is powered by Shopify and their Instagram game is top-notch :

Take another brand whose name makes me hungry :

Any guesses, which brand is it? It is Behrouz Biryani. They created an a entire story of a kingdom that never existed. These stories come on their boxes every time you order their mouth savoring Biryanis.

Ending this post with a little takeaway :

For being true to your stories, you have to be true to yourself. This is the most attractive trait of these thriving D2C brands or for someone you meet over a coffee.

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I will come back with a second post on Storytelling for your products in part 2 of this post. Till then, see ya!

For any comments or discussions, please feel free to reach out. And if you think you’d like to read more of these posts on Storytelling, Content, Creativity, Business, and everything in between, you know what to do 👇 :